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Although Bitcoin is often linked to criminals, hackers, and the dark web, Sofrep News, a news and intelligence site from Special Operation Veterans, believes that “Bitcoin is overrated” when it comes to financing terrorism.

The Rise of Cryptocurrency Terrorism

In the past year, that has been an increasing number of criminals using cryptocurrencies as a form of payment whether it be for ransom, kidnappings or facilitating the exchange of illicit substances. However, when it comes to funding terror, there are many barriers and technical problems that make it a poor medium of exchange.

According to the Encyclopaedia Britannica, terrorism is defined as “the systematic use of violence to create a general climate of fear in a population and thereby to bring about a particular political objective.” Matt Peyer, a Marine Corps Signals Intelligence turned money laundering investigator for a National Bank argued that there are too many existing boundaries and problems for terrorists to successfully finance terrorism through cryptocurrencies.

Peyer noted that Bitcoin may appeal to younger Jihadists who are embracing the digital age. However, most terror funding efforts seeking cryptocurrencies are around activities that yield little money like crowdfunding sites. “One likely reason comes from the fact that high-ranking terrorists are old school,” said Peyer. Peyer however, admits that “as younger members take control (or the current leaders are killed off), the dynamic may change.”

Bitcoin Transactions Are Still Traceable

Although Bitcoin is well known for its anonymity, it’s rather pseudonymous. Bitcoin addresses and transactions are not tied to the identity of users. However, real identities are easily be traced if they are used in combination with Bitcoin addresses in certain ways. Furthermore, the blockchain records all transaction from the date, time and people involved.

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Many criminals leverage the anonymity of Bitcoin to hide their actions from the law. On the other hand, terrorists and terrorist attacks purposefully draw attention to the situation. Peyer stated that, the Bitcoin blockchain also makes it easy for investigators to follow the trail and uncover leading and critical members in a large underground network.

Bitcoin Mining Leverages Terrorism

As for sustainability, if terrorists were to leverage Bitcoin, they’d most likely be involved in the mining process. Computer mining may sound simple but with Bitcoin’s rise to popularity, it’s become ever more difficult due to increasing competition. Mining computers, therefore, cost a lot from $5,000 to $35,000. The upfront costs, electricity consumption, and hardware requirements are extremely difficult in a third world country. Even in a developed nations, the sheer amount of energy would draw out attention. Peyer mentioned that police agencies already look out for sites with high energy consumption, especially when searching for houses growing marijuana.

If mining is too difficult, terrorists could theoretically purchase from cryptocurrency exchanges. However with new anti-money laundering (AML) and know your customer (KYC) regulations, analysts are busy looking for suspicious cases of money laundering and terrorist findings. Any suspicious activities are also reported to the federal government.

Volatile Prices Pose Concerns

Bitcoin’s volatile prices pose significant risks in financing terrorism, especially since the money laundering process is long and extensive.

“Funds move clandestinely to avoid alerting investigators,” said Peyer. “If a currency loses half its value in a short time or gets wiped out by hackers, then what good is it?” Peyer commented that assets like gold, retain their value. Terrorists, therefore, would prefer gold over cryptocurrencies as their value remains fairly consistent overtime.

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